Gorbachev, Yeltsin hold 'breakthrough' meeting

MOSCOW -- Soviet President Mikhail S. Gorbachev and Russian leader Boris N. Yeltsin yesterday held their first substantial talks since their summer accord on economic reform dissolved in mutual accusations last month.

A spokeswoman for Mr. Yeltsin described the meeting as productive, calling it a "breakthrough" in the perpetually strained relations between the country's two leading politicians. Details of any agreements reached could not be learned last night.

Recent clashes of Mr. Gorbachev and Mr. Yeltsin over economic policy left potential foreign investors baffled and threatened to paralyze the planned transition to a market economy.

They spoke briefly while walking together at the head of the official Red Square demonstration on the Nov. 7 revolution anniversary, but yesterday's meeting was their first known negotiating session since late August.

Meanwhile, Moscow's City Council opened debate on a plan to extend rationing to most food and consumer goods and begin a crash program to privatize nearly all the retail stores in this capital of socialism.

But Communists, who now hold a minority of council seats, vowed to fight the plan.

The day's events illustrated the problem of coordinating economic reforms among authorities at the union, republic and local levels.

Political rivalry and power struggles are greatly complicating the already titanic task of turning a supercentralized, military-oriented economy into a flexible market economy to serve consumers.

Hopes for coordinated, radical economic change rose last summer, when Mr. Gorbachev and Mr. Yeltsin jointly assigned a team of economists to produce a plan for the transition to market. Both men subsequently endorsed the 500-day reform plan drawn up by the team, which envisioned a dramatic shift of power from the central Soviet government to the 15 republics, including the giant Russian Federation headed by Mr. Yeltsin.

But the central government, headed by Prime Minister Nikolai I. Ryzhkov, fought back. Mr. Ryzhkov insisted on presenting his own, far more cautious economic plan, which had behind-the-scenes support from the powerful military-industrialcomplex and the central bureaucracy.

Mr. Yeltsin and the Russian parliament publicly called for the resignation of Mr. Ryzhkov's government and were joined by thousands of demonstrators. But Mr. Gorbachev defended his old ally and sought a compromise economic program, which many economists declared impossible.

Last month, the Soviet parliament finally approved an extremely general, watered-down compromise presented by Mr. Gorbachev. It was welcomed by Mr. Ryzhkov -- whose government was saved, at least temporarily -- and denounced by Mr. Yeltsin as a "catastrophe" and "fraud."

Mr. Gorbachev, for his part, accused Mr. Yeltsin of trying to dodge responsibility for the severe economic troubles ahead. The "center-left" coalition -- the Soviet president in the center and the Russian leader on the left -- previously hailed by many of the country's most popular politicians had disintegrated into a state of cold war.

As a result, economic change has been muddled and in some cases paralyzed. Mr. Gorbachev, Mr. Ryzhkov and the Soviet parliament have asserted the priority of Soviet laws; Mr. Yeltsin and the Russian parliament have repeatedly insisted that their laws take priority.

In areas from banking to taxes, the union and republic governments have been working at cross-purposes. Foreign businesspeople visiting Moscow to conclude deals have postponed decisions, uncertain whether to negotiate with union officials or Russian officials.